Walmart CEO defends Flipkart's valuation, says learnings from India helped double their e-commerce sales

• Walmart, in July 2020, made its second investment in Flipkart, two years after it bought an almost 80% stake in the Indian e-commerce giant for $16 billion.
• Walmart CEO Doug McMillon defended Flipkart’s valuation and added that they were really ‘pleased’.
• McMillon also said that their acquisition of Flipkart and seeing its success in the Indian market has also helped Walmart.

Walmart, in July 2020, made its second investment in Flipkart, two years after it bought an almost 80% stake in the Indian e-commerce giant for $16 billion. One would have expected that Flipkart, which was not only Walmart’s strong bet in e-commerce but also bought out Walmart India recently, would see a much higher jump in valuation than the 19% hike.


But during an earnings call on Tuesday, Walmart CEO Doug McMillon defended Flipkart’s valuation and said that they were really ‘pleased’.

“We're not really getting hung-up on the valuation in the short-term. Over time, I think everybody will understand just how valuable business in India is, whether it's the Flipkart portion or the PhonePe portion,” he said.

It’s worth noting that PhonePe – Walmart’s payments bet through Flipkart, has been witnessing a valuation crisis. While it was valued at $1.5 billion in 2018 after Walmart’s investment in Flipkart, over the last two years the company has grown with numerous rounds of funding from Flipkart itself. While Morgan Stanley had valued the payments firm at $7 billion, reports say PhonePe has been looking at a $10 billion valuation.

Meanwhile, McMillon said that having been excited about Flipkart’s performance during and after COVID-19 lockdown, Walmart wanted to make sure they had enough cash to operate, and that’s why the investment came through in July. “This is a time when there's so much of an opportunity that the size of the price in India is significant. We want to make sure that we're on our front foot being aggressive,” he said.

Walmart’s big e-commerce jump is also thanks to Flipkart

Walmart surprised market analysts on Tuesday after its profits jumped 8.5% to $6.1 billion, while its revenue grew by 5.6% to $137.7 billion.

Another surprising number was the US retail giant claiming that its e-commerce sales had nearly doubled on a year-on-year basis. And this comes after Walmart has been trying to win over the e-commerce segment for years now.

McMillon explained that the success in e-commerce sales comes as many things were aligned even before the coronavirus pandemic, and the lockdown only accelerated the same. McMillon added that their acquisition of Flipkart and seeing how it takes off in the Indian market has also helped Walmart. “We're learning a lot from Flipkart and how they operate,” he said during the call.

Walmart CEO also said that despite the coronavirus pandemic, Flipkart has seen its sales exceeding pre-COVID levels.

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